Thrid party scenario
This query is : Resolved
17 April 2017
How to process third party sales in GST regime.
Suppose for a scenario where Customer and Sales office are from the same state A, but the Vendor is from the different state B and our Bill to party is from A.
My vendor ships the goods to customer from State B to A with dispatch document ? (Any other documents required?)
He will send the Bill (AP) to my sales office with IGST
Then my sales office will generate (AR) bill to customer with CGST+SGST.
Suppose for a scenario where Customer and Sales office are from the same state A, but the Vendor is from the different state B and our Bill to party is from A.
My vendor ships the goods to customer from State B to A with dispatch document ? (Any other documents required?)
He will send the Bill (AP) to my sales office with IGST
Then my sales office will generate (AR) bill to customer with CGST+SGST.
17 April 2017
bill by vendor with IGST will be your purchase and bill with CGST & SGST will be your sales
17 April 2017
Thanks for your reply.
So my vendor will send the IGST bill to my sales office.
what legal documents will be required , when the vendor ships the goods to the customer (Like bill of supply any?)
So my vendor will send the IGST bill to my sales office.
what legal documents will be required , when the vendor ships the goods to the customer (Like bill of supply any?)
17 April 2017
Thanks for your reply.
So my vendor will send the IGST bill to my sales office.
what legal documents will be required in GST, when the vendor ships the goods to the customer (Like bill of supply any?)
So my vendor will send the IGST bill to my sales office.
what legal documents will be required in GST, when the vendor ships the goods to the customer (Like bill of supply any?)
02 August 2025
In a **third-party or “bill-to-ship-to” model under GST**, the **movement of goods** and **invoice trail** must align with the GST law to avoid compliance issues. Here’s a complete breakdown for your case:
---
### ✅ **Scenario Recap:**
* **Customer (Ship-To)**: In **State A**
* **Sales Office (Bill-To)**: Also in **State A**
* **Vendor/Supplier**: In **State B**
**Vendor in State B ships goods to the Customer in State A**, but **bills the Sales Office (also in State A).**
---
### 🔄 **How GST Works in This Case:**
1. **First Leg: Vendor to Sales Office**
* **Type of Supply**: Inter-state supply
* **Tax Charged**: **IGST**
* **Invoice Type**: "Bill to – Sales Office (State A), Ship to – Customer (State A)"
* **Who Pays IGST?**: You (Sales Office) pay IGST and claim Input Tax Credit.
2. **Second Leg: Sales Office to Customer**
* **Type of Supply**: Intra-state supply
* **Tax Charged**: **CGST + SGST**
* **Invoice Type**: “Bill to and Ship to – Customer (State A)”
* **You Generate Sales Invoice**: With **CGST + SGST**
---
### 📃 **Documents Required During Movement:**
#### When **Vendor (State B)** ships goods to **Customer (State A)**:
1. **Tax Invoice (IGST)**:
* Should mention:
* **Bill To**: Your Sales Office (State A)
* **Ship To**: End Customer (State A)
* IGST charged since the **location of supplier (B)** ≠ **place of supply (A)**
2. **E-Way Bill**:
* Mandatory if value > ₹50,000 (subject to rules in states).
* Should reflect **"bill-to-ship-to"** model properly:
* **"Bill To"**: Sales Office (your GSTIN in State A)
* **"Ship To"**: Customer (delivery address in State A)
3. **Delivery Challan** *(optional but recommended)*:
* If there's confusion about tax invoice with movement, vendor can also send a **delivery challan** with the consignment.
---
### ⚖️ **Legal Support in GST Law:**
As per **Section 10(1)(b) of the IGST Act**:
> *Where the goods are delivered by a supplier to a recipient or any other person on the direction of a third person, it shall be deemed that the said third person has received the goods.*
This legally validates your **bill-to-ship-to** model and supports charging **IGST in the first leg** and **CGST+SGST in the second leg**.
---
### ✅ **Summary of Tax and Documentation:**
| **Party** | **Tax Invoice Type** | **GST Charged** | **Documents for Movement** |
| ---------------------------------------------- | -------------------- | --------------- | ------------------------------------------------------ |
| Vendor → Sales Office (Bill) → Customer (Ship) | Inter-State Invoice | IGST | Invoice + E-Way Bill (with proper "bill to"/"ship to") |
| Sales Office → Customer (Billing) | Intra-State Invoice | CGST + SGST | Your regular tax invoice |
---
### ❗ Important Notes:
* Ensure **Vendor’s invoice & E-Way Bill** are in sync.
* Keep records of all transactions to defend the **flow of goods vs. flow of invoice** if questioned.
* Don't miss ITC reconciliation in **GSTR-2B/GSTR-3B** to claim IGST input correctly.
---
Let me know if you'd like a **sample invoice format** or E-Way Bill walkthrough for this scenario.
---
### ✅ **Scenario Recap:**
* **Customer (Ship-To)**: In **State A**
* **Sales Office (Bill-To)**: Also in **State A**
* **Vendor/Supplier**: In **State B**
**Vendor in State B ships goods to the Customer in State A**, but **bills the Sales Office (also in State A).**
---
### 🔄 **How GST Works in This Case:**
1. **First Leg: Vendor to Sales Office**
* **Type of Supply**: Inter-state supply
* **Tax Charged**: **IGST**
* **Invoice Type**: "Bill to – Sales Office (State A), Ship to – Customer (State A)"
* **Who Pays IGST?**: You (Sales Office) pay IGST and claim Input Tax Credit.
2. **Second Leg: Sales Office to Customer**
* **Type of Supply**: Intra-state supply
* **Tax Charged**: **CGST + SGST**
* **Invoice Type**: “Bill to and Ship to – Customer (State A)”
* **You Generate Sales Invoice**: With **CGST + SGST**
---
### 📃 **Documents Required During Movement:**
#### When **Vendor (State B)** ships goods to **Customer (State A)**:
1. **Tax Invoice (IGST)**:
* Should mention:
* **Bill To**: Your Sales Office (State A)
* **Ship To**: End Customer (State A)
* IGST charged since the **location of supplier (B)** ≠ **place of supply (A)**
2. **E-Way Bill**:
* Mandatory if value > ₹50,000 (subject to rules in states).
* Should reflect **"bill-to-ship-to"** model properly:
* **"Bill To"**: Sales Office (your GSTIN in State A)
* **"Ship To"**: Customer (delivery address in State A)
3. **Delivery Challan** *(optional but recommended)*:
* If there's confusion about tax invoice with movement, vendor can also send a **delivery challan** with the consignment.
---
### ⚖️ **Legal Support in GST Law:**
As per **Section 10(1)(b) of the IGST Act**:
> *Where the goods are delivered by a supplier to a recipient or any other person on the direction of a third person, it shall be deemed that the said third person has received the goods.*
This legally validates your **bill-to-ship-to** model and supports charging **IGST in the first leg** and **CGST+SGST in the second leg**.
---
### ✅ **Summary of Tax and Documentation:**
| **Party** | **Tax Invoice Type** | **GST Charged** | **Documents for Movement** |
| ---------------------------------------------- | -------------------- | --------------- | ------------------------------------------------------ |
| Vendor → Sales Office (Bill) → Customer (Ship) | Inter-State Invoice | IGST | Invoice + E-Way Bill (with proper "bill to"/"ship to") |
| Sales Office → Customer (Billing) | Intra-State Invoice | CGST + SGST | Your regular tax invoice |
---
### ❗ Important Notes:
* Ensure **Vendor’s invoice & E-Way Bill** are in sync.
* Keep records of all transactions to defend the **flow of goods vs. flow of invoice** if questioned.
* Don't miss ITC reconciliation in **GSTR-2B/GSTR-3B** to claim IGST input correctly.
---
Let me know if you'd like a **sample invoice format** or E-Way Bill walkthrough for this scenario.
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